-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JDvLEUiKirTJk4Gb0mjoAH3RlqUXyr57PBPlPVOf//6sOoIi965vVV67ZAGkB7Ps xEPptChONsN2YDYC/4k+rA== 0000003000-94-000012.txt : 19940817 0000003000-94-000012.hdr.sgml : 19940817 ACCESSION NUMBER: 0000003000-94-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIRBORNE FREIGHT CORP /DE/ CENTRAL INDEX KEY: 0000003000 STANDARD INDUSTRIAL CLASSIFICATION: 4513 IRS NUMBER: 910837469 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06512 FILM NUMBER: 94543775 BUSINESS ADDRESS: STREET 1: P O BOX 662 CITY: SEATTLE STATE: WA ZIP: 98111 BUSINESS PHONE: 2062854600 10-Q 1 6/30/94 FORM 10Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1994 Commission File Number 1-6512 AIRBORNE FREIGHT CORPORATION ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware ---------------------------------------- (State of incorporation or organization) 91-0837469 --------------------------------- (IRS Employer Identification No.) 3101 Western Avenue P.O. Box 662 Seattle, Washington 98111-0662 ------------------------------ (Address of Principal Executive Office) Registrant's telephone number, including area code: (206) 285-4600 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: XXX No: --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the close of the period covered by this report. Common Stock, par value $1 per share Outstanding (net of 315,150 treasury shares) as of June 30, 1994 20,967,374 shares ----------------- AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF NET EARNINGS (Dollars in thousands except per share data) (Unaudited)
Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 1994 1993 1994 1993 ---- ---- ---- ---- REVENUES: Domestic $407,657 $363,744 $804,541 $709,704 International 76,885 56,137 146,553 108,943 -------- -------- -------- -------- 484,542 419,881 951,094 818,647 OPERATING EXPENSES: Transportation purchased 162,534 131,454 317,532 256,234 Station and ground operations 144,931 130,669 290,141 257,226 Flight operations and maintenance 65,454 61,135 131,236 119,754 General and administrative 36,552 34,699 72,268 66,705 Sales and marketing 14,037 12,478 27,332 25,129 Depreciation and amortization 33,309 33,152 67,074 65,369 -------- -------- -------- -------- 456,817 403,587 905,583 790,417 -------- -------- -------- -------- EARNINGS FROM OPERATIONS 27,725 16,294 45,511 28,230 INTEREST, NET (6,069) (6,066) (12,010) (12,026) -------- -------- -------- -------- EARNINGS BEFORE INCOME TAXES 21,656 10,228 33,501 16,204 INCOME TAXES (8,593) (3,946) (13,438) (6,296) -------- -------- -------- -------- NET EARNINGS BEFORE CHANGES IN ACCOUNTING 13,063 6,282 20,063 9,908 CUMULATIVE EFFECT OF CHANGES IN - - - 3,828 ACCOUNTING -------- -------- -------- -------- NET EARNINGS 13,063 6,282 20,063 13,736 PREFERRED STOCK DIVIDENDS (103) (688) (687) (1,369) -------- -------- -------- -------- NET EARNINGS AVAILABLE TO COMMON SHAREHOLDERS $ 12,960 $ 5,594 $ 19,376 $ 12,367 ======== ======== ======== ======== NET EARNINGS PER COMMON SHARE: Primary - Before changes in accounting $ .61 $ .29 $ .93 $ .44 Cumulative effect of changes in - - - .19 accounting -------- -------- -------- -------- Net earnings available to common shareholders $ .61 $ .29 $ .93 $ .63 Fully Diluted - Before changes in accounting $ .57 $ .29 $ .89 $ .44 Cumulative effect of changes in - - - .19 accounting -------- -------- -------- -------- Net earnings available to common $ .57 $ .29 $ .89 $ .63 shareholders ======== ======== ======== ======== DIVIDENDS PER COMMON SHARE $ .075 $ .075 $ .15 $ .15 ======== ======== ======== ======== See notes to consolidated financial statements.
AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
June 30 December 31 ------- ----------- ASSETS ------ 1994 1993 ---- ---- (Unaudited) CURRENT ASSETS: Cash $ 6,045 $ 7,134 Trade accounts receivable, less allowance of $7,325 and $6,925 204,331 190,787 Spare parts and fuel inventory 27,442 27,224 Deferred income tax assets 16,525 15,206 Prepaid expenses 14,977 18,815 ---------- ---------- TOTAL CURRENT ASSETS 269,320 259,166 PROPERTY AND EQUIPMENT, NET 759,762 733,963 EQUIPMENT DEPOSITS and OTHER ASSETS 17,107 13,780 ---------- ---------- TOTAL ASSETS $1,046,189 $1,006,909 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 106,546 $ 95,684 Salaries, wages and related taxes 38,059 37,885 Accrued expenses 58,713 55,545 Income taxes payable 2,733 3,638 Current portion of debt 5,899 5,850 ---------- ---------- TOTAL CURRENT LIABILITIES 211,950 198,602 LONG-TERM DEBT 280,933 269,250 SUBORDINATED DEBT 118,580 122,150 DEFERRED INCOME TAX LIABILITIES 29,882 28,262 OTHER LIABILITIES 26,901 29,821 REDEEMABLE PREFERRED STOCK 6,000 40,000 SHAREHOLDERS' EQUITY: Preferred Stock, without par value - Authorized 5,200,000 shares, no shares issued Common stock, par value $1 per share - Authorized 60,000,000 shares Issued 21,282,524 and 19,688,731 shares 21,282 19,689 Additional paid-in capital 184,337 149,156 Retained earnings 167,295 150,950 ---------- ---------- 372,914 319,795 Treasury stock, 315,150 shares, at cost (971) (971) ---------- ---------- 371,943 318,824 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,046,189 $1,006,909 ========== ========== See notes to consolidated financial statements.
AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Six Months Ended June 30 ---------------- 1994 1993 ---- ---- OPERATING ACTIVITIES: Net Earnings $ 20,063 $ 13,736 Adjustments to reconcile net earnings to net cash provided by operating activities: Cumulative effect of changes in accounting - (3,828) Depreciation and amortization 62,119 59,754 Provision for aircraft engine overhauls 4,955 5,615 Deferred income taxes 301 (1,250) Other (2,920) (2,103) -------- -------- CASH PROVIDED BY OPERATIONS 84,518 71,924 Change in: Receivables (13,544) (8,604) Inventories and prepaid expenses 3,620 (1,026) Accounts payable 12,218 3,792 Accrued expenses, salaries & taxes payable 2,437 7,749 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 89,249 73,835 INVESTING ACTIVITIES: Additions to property and equipment (94,267) (89,144) Dispositions of property and equipment 755 188 Expenditures for engine overhauls (3,064) (1,934) Other (889) (2,094) -------- --------- NET CASH USED IN INVESTING ACTIVITIES (97,465) (92,984) FINANCING ACTIVITIES: Proceeds from bank note borrowings, net 47,000 29,200 Principal payments on debt (38,838) (4,491) Proceeds from common stock issuance 2,803 605 Dividends paid (3,838) (4,265) -------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 7,127 21,049 -------- --------- NET INCREASE (DECREASE) IN CASH (1,089) 1,900 CASH AT DECEMBER 31 7,134 10,179 -------- --------- CASH AT JUNE 30 $ 6,045 $ 12,079 ======== ========= See notes to consolidated financial statements.
AIRBORNE FREIGHT CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANACIAL STATEMENTS June 30, 1994 (Unaudited) NOTE A--SUMMARY OF FINANCIAL STATEMENT PREPARATION: The consolidated financial statements included herein are unaudited but include all adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations and cash flows for the interim periods reported. Certain amounts for prior periods have been reclassified to conform to the 1994 presentation. NOTE B--LONG-TERM DEBT: Long-term debt consists of the following:
June 30 December 31 ------- ----------- 1994 1993 ---- ---- (In thousands) Senior debt: Revolving bank credit $152,000 $105,000 Notes payable -- 34,000 Senior notes 100,000 100,000 Revenue bonds 13,200 13,200 Other debt 18,062 19,330 -------- -------- 283,262 271,530 Subordinated debt: Senior subordinated notes 7,150 10,720 Convertible subordinated debentures 115,000 115,000 -------- -------- 122,150 125,720 -------- -------- Total long-term debt 405,412 397,250 Less current portion 5,899 5,850 -------- -------- $399,513 $391,400 ======== ========
NOTE C--EARNINGS PER COMMON SHARE: Primary earnings per common share are based upon the weighted average number of common shares outstanding during the interim period plus dilutive common equivalent shares applicable to the assumed exercise of outstanding stock options. Fully diluted earnings per share for the three and six months ended June 30, 1994, assumes conversion of the Company's redeemable preferred stock and convertible subordinated debentures as well as the dilutive common equivalent shares applicable to the assumed exercise of stock options. Net earnings as adjusted for the elimination of preferred stock dividends and interest expense, net of applicable taxes, relative to the assumed conversions was $14,128,000 and $22,193,000 for the three and six month periods, respectively. Fully diluted earnings per share for the three and six month period ended June 30, 1993 are the same as primary earnings per share. Average shares outstanding used in earnings per share computations were as follows:
Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 1994 1993 1994 1993 ---- ---- ---- ---- AVERAGE SHARES OUTSTANDING Primary 21,404 19,571 20,788 19,539 Fully Diluted 24,900 19,614 24,900 19,600
NOTE D--ACCOUNTING CHANGES: The Company adopted several new accounting standards as of January 1, 1993 and recorded the effect of the changes in the quarter ended March 31, 1993. The new standards change the Company's methods used to account for income taxes and post-retirement health care benefit costs. The net cumulative effect of adopting these standards was to increase net earnings for the period ended March 31, 1993 by $3,828,000 or $.19 per share. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS: The Company's operating performance in the second quarter of 1994 resulted in significantly higher operating income and net earnings compared to the second quarter of 1993, continuing the trend of improved comparative operating results realized in first quarter 1994. This improvement was the result of strong productivity gains, cost controls, and strong growth in international heavyweight business. The growth rate of domestic business, while good, slowed somewhat versus prior periods. Net earnings available to common shareholders for the first six months of 1994 were $19.4 million, or $.93 per share, compared to $12.4 million, or $.44 per share for the first half of 1993. The 1993 net earnings are before the cumulative effect of changes in accounting which resulted in a net increase to earnings of $.19 per share, increasing the net earnings available to common shareholders to $.63 per share. Second quarter 1994 earnings available to common shareholders were $.61 per share compared to $.29 per share for the second quarter of 1993. On a fully diluted basis, earnings per share were $.89 and $.57 for the first six months and second quarter of 1994, respectively. The following table sets forth selected shipment and revenue data for the comparative periods indicated:
Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 1994 1993 1994 1993 ---- ---- ---- ---- Shipments (in thousands): Domestic Overnight Letters 8,498 8,144 16,974 16,063 0-2 Lbs. 11,002 10,291 21,790 20,072 3-99 Lbs. 9,670 8,717 19,298 16,992 ------ ------ ------ ------ 29,170 27,152 58,062 53,127 Select Delivery Service 0-2 Lbs. 10,132 7,598 19,698 14,979 3-99 Lbs. 6,024 4,394 11,806 8,406 ------ ------ ------ ------ 16,156 11,992 31,504 23,385 100 Lbs. & over 90 87 176 171 ------ ------ ------ ------ Total Domestic 45,416 39,231 89,742 76,683 ------ ------ ------ ------ International Express 859 783 1,663 1,528 All Other 122 100 234 194 ------ ------ ------ ------ Total International 981 883 1,897 1,722 ------ ------ ------ ------ Total Shipments 46,397 40,114 91,639 78,405 ====== ====== ====== ====== Average Pounds per Shipment: Domestic 4.8 4.7 4.7 4.7 International 64.9 44.1 63.2 44.1 Average Revenue per Pound: Domestic $ 1.87 $ 1.97 $ 1.89 $ 1.97 International $ 1.20 $ 1.46 $ 1.21 $ 1.44 Average Revenue per Shipment: Domestic $ 8.98 $ 9.27 $ 8.97 $ 9.26 International $78.37 $63.58 $77.26 $63.27
Total shipments increased 17% in the first six months of 1994 compared to an increase of 25% in the first six months of 1993. Domestic and international shipments increased by 17% and 10%, respectively, during this period of 1994 compared to 26% and 6%, respectively, for the same period of 1993. Domestic shipments increased 16% and international shipments increased 11% in the second quarter of 1994 compared to 1993. The growth in international shipments was aided by the growth in higher yielding freight shipments which increased 21% in the first six months of 1994 compared to a decrease of 8% for the same period of 1993. The growth in domestic shipments continues to be aided by growth in the Company's deferred service product, Select Delivery Service (SDS), which provides next afternoon and second-day delivery service. For the first six months of 1994, SDS accounted for over 35% of total domestic shipments, compared to 30% for the first six months of 1993. While the overall domestic growth rate in the first two quarters of 1994 is fairly strong, it is a lower growth rate than experienced in previous periods. This slower rate appears to be the result of uncertain economic conditions. The domestic growth rate will be key to results in the second half of the year. Domestic revenues increased 13% in the first six months of 1994 compared to 17% in 1993. International revenues increased 35% in the first six months of 1994 compared to a decrease of 3% in 1993. The strong growth rate of heavyweight international shipments is driving the significant growth rate of international revenues. Total revenues increased 16% in the first six months of 1994 compared to 14% in the first six months of 1993. Average domestic revenue per shipment for the second quarter of 1994 declined only 3.1% compared to the second quarter of 1993 to $8.98 per shipment. International revenue per shipment and the average weight per shipment increased significantly as a result of the strong unit growth in higher yielding freight shipments. Operating expenses as a percentage of revenues were 95.2% for the first six months of 1994 compared to 96.6% in the first six months of 1993 and 95.2% for all of 1993. Operating cost per shipment handled decreased approximately 2% to $9.88 for the first six months of 1994 compared to the first six months of 1993. This reduction in total operating cost per shipment appears low due to the increase of costs in the transportation purchased category and the correlating increase in transportation purchased cost per shipment. Operating cost per shipment decreased approximately 6% for all other operating expense categories combined, factoring out transportation purchased, for this same period. The severe winter weather and the Los Angeles earthquake also negatively affected operating expenses during the first quarter of 1994. The Company experienced a 6% improvement in productivity for the second quarter of 1994 as measured by shipments handled per paid employee hour. Comparisons of certain operating expense components are discussed below. Transportation purchased increased as a percentage of revenues to 33.4% in the first six months of 1994 compared to 31.3% in 1993. This increase was primarily due to higher commercial airline costs resulting from the increase in international freight shipments discussed above. Station and ground expense as a percentage of revenues in the first six months of 1994 was 30.5% compared to 31.4% in the first six months of 1993, as productivity gains achieved offset costs incurred to maintain service integrity. Flight operations and maintenance expense as a percentage of revenues during the first six months of 1994 was 13.8%, compared to 14.6% in the first six months of 1993. Average aviation fuel price for the first half of 1994 was $.59 per gallon compared to the average price of $.66 per gallon in the first half of 1993. Aviation fuel consumption increased 16% to 59.6 million gallons in the first half of 1994 compared to the same period in 1993. The increase in fuel consumption is a result of additional Company operated aircraft placed in service since the first quarter of 1993 and to the disruption to air operations as a result of severe winter weather. The increased number of aircraft in service also accounted for the slight increase in depreciation and amortization expense which, as a percentage of revenues in the first half of 1994 was 7.1%, compared to 8.0% for the same period in 1993. General and administrative, and sales and marketing expenses decreased as a percentage of revenues in the first six months of 1994 compared to 1993. This was primarily the result of continuing productivity gains and a strong focus on all discretionary spending. Interest expense in the first six months of 1994 was comparable to the level of expense in the same period of 1993, as slightly higher effective interest rates and lower amount of capitalized interest were offset by the benefit of lower average outstanding borrowings. The Company's effective tax rate was 40.1% in the first six months of 1994 compared to 38.9% in the first six months of 1993 and 40.2% for all of 1993. The Company anticipates the effective tax rate for the 1994 year to be comparable to the first six months of 1994. LIQUIDITY AND CAPITAL RESOURCES: Capital expenditures and associated financing continue to be the primary factors affecting the financial condition of the Company. The Company anticipates total capital expenditures to approximate $185 million in 1994, of which a significant portion is related to the acquisition and modification of aircraft. During the first six months of 1994, total capital expenditures net of dispositions were $94 million. The principal sources of liquidity for financing capital expenditures during the first six months of 1994 were cash provided by operations and financing under the Company's bank lines of credit. The Company's unsecured revolving bank credit agreement has traditionally been used as a major source of liquidity for periods between other financing transactions. The Company has a revolving bank credit agreement providing for a total commitment of $240 million, subject to a maximum level of Company indebtedness permitted by certain covenants in the agreement and other loan agreements. The Company also has available $25 million under unsecured uncommitted money market lines of credit with several banks, used in conjunction with the revolving credit agreement to facilitate settlement and accommodate short-term borrowing fluctuations. At June 30, 1994, a total of $152 million was outstanding under the revolving bank credit and money market credit lines. In management's opinion, the available capacity under the bank credit agreements coupled with internally generated cash flow from remaining 1994 operations and other sources of borrowing should provide adequate flexibility to finance anticipated capital expenditures for the balance of 1994. PART II. OTHER INFORMATION -------------------------- Information required under Part II is not applicable for the quarter ended June 30, 1994. SIGNATURES ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized: AIRBORNE FREIGHT CORPORATION ---------------------------- (Registrant)
Date: 8/12/94 /s/Roy C. Liljebeck ------------------------- ------------------------- Roy C. Liljebeck Executive Vice President, Chief Financial Officer Date: 8/12/94 /s/Lanny H. Michael ------------------------- ------------------------- Lanny H. Michael Senior Vice President, Treasurer and Controller
EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1994 JAN-01-1994 JUN-30-1994 6,045 0 211,656 7,325 27,442 269,320 1,323,341 563,579 1,046,189 211,950 399,513 21,282 6,000 0 350,661 1,046,189 0 951,094 0 905,583 0 0 12,010 33,501 13,438 0 0 0 0 19,376 .93 .89
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